ch 2 - I. Analyzing and recording transactions A. Learn a...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
I. Analyzing and recording transactions A. Learn a formal way of evaluating a transaction, recording a transaction and generating a report II. The account and its analysis A. Account: a record of increases and decreases in a specific asset, liability, equity, revenue or expense item 1. Changes in accounts must still result in a balanced accounting equation a) Assets = liabilities + equity 2. Each component in the accounting equation is made up of many subcomponents or accounts 3. Types a) Asset: resources owned by a company * Ex: land, cash, accounts receivable, supplies, equipment, buildings * Eventually get used up and then become expenses (Ex: as a building depreciated it becomes an expense) * Prepaid accounts (accounts in which the customer has paid in advance of receiving the good): when the good is delivered the amount of the good becomes an expense b) Liability: obligations owed by a company * Accounts and notes payable: increase when purchases are made on credit and decrease when the cash is delivered * Accrued liabilities: amounts owed but not paid; bills received but not processed (ex: taxes payable, utilities payable) * Unearned revenues: result when a customer pays in advance of receiving products, decreases when service is provided because this money is then transferred to revenues (opposite of prepaid account) c) Equity accounts: owners interest after liabilities and assets are paid off * Retained earnings, dividends, common stock, revenues (increase when a product is provide), expenses (increase as assets are exhausted and become expenses) * Are increased by common stock investments and by increases of revenue * Are decreased by dividends and expenses
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
III. Ledger and chart of accounts
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Page1 / 5

ch 2 - I. Analyzing and recording transactions A. Learn a...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online